VMC has evaded labour cess: Vigilance report


‘Cess collected should be utilised for the welfare of construction and other labourers'

The Vijayawada Municipal Corporation (VMC) boasts of implementing developmental projects costing Rs.1,400 crore under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) programme in the city.

But, on the other side of the coin, there is a murky tale to tell.

The corporation has not recovered or collected labour cess from contractors and establishments that have executed the works.

The VMC has also not collected labour cess on the estimated cost of buildings while approving building plans as per the provisions.

“The VMC has evaded labour cess to the tune of Rs.1.16 crore,” said Vigilance and Enforcement (V&E) Department in its report dated March 11, 2010.

According to information, under the Building and Other Construction Workers' Welfare Cess Act, 1996 (Cess Act), it is mandatory for the VMC to collect cess of 1 per cent on the total cost of the work from the contractors. Ever since the V&E gave its report, the Labour Department officials were leaving no stone unturned to recover the cess from the corporation.

The Labour Department requested VMC to furnish details of contractors and establishments that executed works from June 26, 2007.

It also asked it to file monthly and annual returns to the AP Building and Other Construction Workers Welfare Board.

The corporation was also told that the Supreme Court had taken a view that steps should be taken to collect the cess continuously.

The VMC officials, however, have not responded to any of the letters, sources say.


The VMC has executed works costing Rs.562 crore till June 17, 2011. The corporation is supposed to pay a cess of Rs.5.61 crore.

However, it has paid only Rs.3.86 lakh. In addition, the cess on JNNURM works would be more than Rs.15 crore if 1 per cent cess were to be collected on the total cost of the work. The corporation has paid only Rs.1 crore. It, however, did not divulge details of the works, Labour department sources say.

The cess thus collected should be utilised for the welfare of construction and other labourers.

While there are about 2 lakh construction and other labourers in the district, about 91,000 have registered with the welfare board.

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Printable version | Dec 16, 2019 6:59:33 PM |

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